Organizational Structure and Effectiveness - JB Hi-Fi Company - Assignment Example

JB Hi-Fi Company Student’s name: Institutional affiliation: JB Hi-Fi Company JB Hi-Fi limited is a company that is based in Australia. It usually engages in the selling of the home consumer electronic products which include the televisions, video cameras, mobile phones, home theatres, digital still and other electrical accessories like the kitchen equipment, computing equipment, the air conditioners, small electrical appliances like the car sound systems; both visual and audio and other things like the movies and games. It continues to stock exclusive specialist range of Hi-Fi products. JB Hi-Fi has its subsidiaries that include JB Hi-Fi (A) Pty Ltd, JB Hi-Fi Group Pty Ltd, Rocket Replacements Pty Ltd and JB Hi-Fi NZ Limited. JB Hi-Fi was established in 1974 by a simple philosopher Mr. John Barbuto (JB) who was trading from single store in Victoria a place called East Keilor. He was delivering variety of Hi-Fi equipments as well as recorded music at lowest prices in Australia. In 1983, the business was sold and later in 1999, nine stores were opened. With the aim of taking the business to be a successful model all over the nation, private equity bankers and senior management purchased the business in July 2000. JB Hi-Fi was floated in October 2003 on the Australian stock Exchange. JB Hi-Fi is the largest retailer as well as fastest growing home entertainment Retailer Company in Australia. The Queensland Clive Anthony’s stores were bought by JB in July 2004. The Queensland Clive Anthony was selling the consumer goods like the cooking appliances, consumer electronics and air conditioning equipments before it was bought. It has been revealed that the executive or the CEO of a Melbourne based JB who led to the company’s success in year 2009 Richard Uechtritz will retire from the position in August after being in the position for 10 years. He will be succeeded by Terry Smart who joined the company in year 2000 together with Uechtritz. Uechtritz led the company towards making a half year net profit of $76 million in Australian currency which is approximately $66 million from $59 million Australian equivalent of $51 million in corresponding period. He also scaled up the group sales from $1.09 billion one year before to $1.35 billion by end of 2009. The 124 JB’s stores in Australia registered 10.2percent comparative growth across the Australia while in its 10 stores in New Zealand a 5.8 percent growth was achieved. JB Company was resilient throughout the economic crisis; this led to gained consumer confidence by the company. This is a clear indication of a strong retail model and how strong the management team is strong. JB is also well known for being a leader in CD album sales. It is said that for every 10 albums sold, 4 of them are rung up in JB. This is widely seen as a major factor that is behind the Australia’s largest popularity in the CD albums market (JB Hi-Fi, 2010). The JB Hi-Fi Company has a charter that provides the summary of board of directors’ roles in the structure of the business and the company’s operations. To ensure that the company thrives and overcomes the crisis that may come on the way, the company has various strategies and ways to overcome that and to keep the company on the track which includes constitution and board of directors which has various roles and responsibilities. The company has got a constitution and also corporations’ act. The companies’ values are the trust, integrity and honesty. The board carries out the duties in regard to the interest of the companies’ shareholders, staff, customers and the community in which it operates. The board has responsibility for the company’s corporate governance which includes establishment and empowerment of board to assist in its work. The board is also responsible for overseeing the affairs and the business of the company by establishing the financial objectives and strategies for management to implement; reviewing and approving the financial objectives of the company and corporate plans as well as actions; approval of the capital expenditure in excess of limits that have been delegated to the management; approval of the capital management initiatives; another vital role is to ensure that they are adequate procedures are put in place so as to identify the principal risks in the business as well as implementing systems that are appropriate in managing the risks. The board is also responsible for communicating with the shareholders of the company as well as community at the right times towards getting right results and developing the business operations of the company. The board is also responsible for appointing or selecting and evaluating regularly the chief executive officer’s performance and also determining the remuneration and succession of the chief executive officer. The board is also responsible of approving the major human resource major policies as well as overseeing the strategy development for high performing and senior executives. The board should also ensure that the appropriate procedures are put in place so as to make sure that business is conducted in honest, ethical and in an open manner. The board is also supposed to institute the internal procedures for performance evaluation of the board, the individual directors and the board committees. The board of directors has powers to also initiate and adopt the corporate plans, the actions and commitments; initiate and adopt the changes in the principles and practices of accounting; providing the advice and counseling the chief executive officer; making the recommendations to the shareholders; directing company’s management in the business and meeting time to time without necessarily the management to approve some issues. The board also acts to all the corporate matter that does not require the approval of the shareholders. When carrying out its role, the board operates in a way or manner that reflects the values of the company that is accordance with the corporate governance guidelines, the constitution of the company, corporations act and other regulations that are applicable. The board may also delegate to its committees or director to perform any function of the board as well as exercising its powers. JB Hi-Fi Company’s board and management has some matters that are reserved for it which includes the nomination and the remuneration of the directors, chairman appointment, chief execution officer’s appointment and remuneration, chief executive officer’s performance assessment and also that of the board and other executive director’s. The JB Hi-Fi Company has an Audit and Risk Management committee charter (ARM Committee). This sets out the composition, role, responsibilities and the operations of the committee. The ARM has access that is unrestricted to internal audit, management and the external auditors in fulfilling its purpose and also to undertake its duties. The ARM committee has various roles that it undertakes which includes assisting the board towards fulfilling its reliability and integrity of the accounting policies, financial management, financial reporting and asset management and disclosure practices. The ARM committee also establishes and maintains the processes so as to ensure that there the applicable laws, the regulations and the company’s policy is adhered to and that there is adequate of risk management, internal control and the safeguard of the assets; ARM also advises the board on the ethical standards that are appropriate for the company’s management; the committee also oversees the appointment, the relationship and the work of the external and external auditors; recommendation of the financial and non-financial report and information correlation improvement between the two; it strengthens the influence and the role of the non-executive directors and approving the fees for external auditor engagement (JB Hi-Fi, 2010). The ARM committee prepares a risk profile that describes the risks on material that faces the company which includes the non-financial and financial matters, Updating and reviewing the risk profile regularly, it also assesses the internal processes that determine and manages the risk areas like non-compliance with the laws, standards and the best practice guidelines like the environmental and the industrial relations laws, important estimates of accounting and judgments and claims and litigation. The ARM committee is also supposed to do the evaluation of the external auditors and non-executive directors’ independence; ensuring that there is effective management of risk systems that are put in place, examining the internal control system effectiveness with management, external and internal auditors, assessing the compliance to and effectiveness with the ethical conduct code and evaluating the processes. Every member of the ARM committee is supposed to rely on the information, or the expert advice that is prepared by the company’s employee who is believed to be reliable as well as being competent in matters concerned; committee of directors where the member did not serve to matters relating within ARM committee authority (Christine, 2007). In order to avoid and manage the risks that may be on the way, the JB Hi-Fi limited has come up with a policy that oversees the risks that may come on the way. JB Hi-Fi is ever committed towards managing the risks that may involve their working environment, its staff, the assets of the company and its reputation. The JB Hi-Fi Company’s policy is mainly to balance the rewards and the risks so as to optimize the gains from the activities of the business and meeting the stakeholder’s expectations. This policy is usually implemented by the board by ensuring that the procedures are used to identify company’s principle risks and at the same time ensure that appropriate systems are implemented to manage the risks. The audit committee has been given responsibility by the board to advise the board on matters that involve internal control which includes the financial statements because of the diligence, the risk management and the financial systems integrity. It is also responsible of overseeing the appointment, the relationship and the work of the external and internal auditors; it is also supposed to be recommending to shareholders about the termination of the appointment of external auditors where appropriate. This policy is implemented by the Management by establishing and implementing an identifying, monitoring, assessing and managing system of the material risk for the company. The management is supposed to monitor the risk system effectiveness and the internal control management. The Function of internal audit implements this policy by providing an autonomous assurance in relation to process of managing particular risk areas in effective ways (JB Hi-Fi, 2010). JB Hi-Fi limited is committed towards ensuring that the financial markets and shareholders are provided with timely and full time information on the JB Hi-Fi company’s activities in a very clear way that is understandable. JB Hi-Fi also ensures effective communication with the shareholders as well as making it very easier for them to communicate with JB Hi-Fi Company. There is also effective communication between the company and the shareholders through the information release to market via ASX; through annual report distribution and annual general meeting notices; through the other forms of communication like letters which are directly send to the shareholders and the posting of the information that is relevant through the JB Hi-Fi’s website. This type of the structure and clear communication between the company’s shareholders, staff, board of directors and the consumers is a very big strategy that has ensured its survival in the competitive market. The responsibility of the concerned management and effective communication between various branches of administration and management of the company has made it possible for the JB Hi-Fi Company to thrive and be firm even when the situations become tough in the markets both internally and externally. To keep the company in toes and up to date, the JB Hi-Fi company’s board oversees the affairs and the business of the company, selecting or appointing a chief executive officer who is qualified and who can lead the company to higher heights for it to thrive and survive like in the case of Richard Uechtritz who has led the company to getting higher profits and succeeded even in the times of economic crises. The board has now appointed Terry Smart to head the company as chief executive officer after Richard Uechtritz led it for 10 years. Terry Smart joined the company 10 years ago and he has a lot of experience in heading and managing this company (JB Hi-Fi, 2010). The company is currently being faced with a lot of challenges in nowadays mainly due to stiff competition from other companies which are producing substandard goods that are of low price than the JB Hi-Fi Company hence becoming a threat to its products. The company is coming out strongly with the strategies of ensuring that the company continues to produce high quality goods that are satisfying the customer’s needs. The company is also doing all it can to market through advertisements and promotion to ensure that its products are well known and recognized by as many people as possible. The JB Hi-Fi Company has at all moments put the customers’ needs first therefore doing all it can to ensure that every product is of standard and as per customer requirement. In ensuring that high prices of their products do not affect the customer preference and choices due to high prices difference compared with other electronic products, the management is doing all it can to ensure that their product price are reduced a little bit so as to increase the affordability to their customers. The company’s board of directors and management is laying out strategies that ensure that the company moves to higher heights currently and also in future. A lot of new strategies are being laid down so as to ensure that the company moves even more higher when it comes to profits and also ensuring that it cannot be affected by any crises that may come on the way. All this is able if the chief executive officer, the board, staff and the stakeholders’ strategies and put customers needs in front of everything else. References Christine, O. (2007). Major Companies of Australasia. California: Graham & Whiteside Limited. JB Hi-Fi. (2010, January). Corporate Governance. Retrieved February 10, 2010, from http://www.jbhifi.com.au/corporate/corporate-governance/ JB Hi-Fi. (2010, January). About us. Retrieved February 10, 2010, from http://www.jbhifi.com.au/about-us/ Read More